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The costs of an IPO and the costs of complying with Sarbanes Oxley are so high that no company with revenue less than $100m can afford to go public. I would li
by russell 15y ago
The costs of an IPO and the costs of complying with Sarbanes Oxley are so high that no company with revenue less than $100m can afford to go public. I would like to see changes so that smaller companies can afford to go public.
- MichaelApproved 15y agoIsn't it easier for a company < 100m to get money from private investors?
- rhizome 15y agoSure, but private investors might cut your thumbs off if you skive.
- MichaelApproved 15y agoShouldn't any investor do that?
- russell 15y agoNot necessarily. The amount needed could be too large for angels or might not meet the requirements of VCs. It might be too risky or it might be a nice solid company without high growth prospects. The problem with private capital is that there has to be an exit strategy, acquisition or IPO. If IPO is closed off because of cost, private capital may be closed off for the same reason. I would like to see less restrictive regulation in this area, not for ideological reasons, but because denies small, but promising, companies access to public markets. Regulation is still needed to keep out fraud, but I dont think is should attempt to deny risk.
- MichaelApproved 15y agoIf private equity doesn't see value (because of limited growth or too much risk) why would the public markets see it differently? I see your point about exits but there are enough private equity companies that are OK with holding companies indefinitely so long as the company is viable. The biggest reason to worry about an exit is liquidity and fear of being the last sucker to invest. Liquidity can be addressed by going in the private market and fear of being the last sucker can be addressed by not buying the company in the first place.